Before the hammer falls: an empirical analysis of the market reaction to art thefts

Abstract This study investigates the effects of art theft on art auction sales. In particular, it focuses on the impact on the auction sales when an artist’s artwork has been stolen and reported in a public list of stolen art. By using criminal data from Interpol’s International Stolen Works of Art Database (SWoA) from 2002 to 2016 all over the world, and auction data concerning all lots put at auction by Christie’s, Sotheby’s, and Phillips in New York and London between 2012 and 2016, we build a hand-collected data on top-tier international auction sales of modern and contemporary artists whose artwork have previously been stolen. The empirical analysis is based on an economic framework of the art auction and on hedonic regression models to test the effect of theft on auction prices. The results hint at a negative effect of theft on the prices of the artworks at market level, which gets stronger as the number of reported stolen artworks from the same artist increases. Overall, the paper provides a nuanced understanding of the complex incentives and disincentives surrounding the reporting of stolen artworks, emphasising the need to balance private interests with broader goals of art theft prevention and recovery. It invites further exploration of potential solutions and their practicality in addressing these conflicts of interest in the art world.